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Reliance MediaWorks February 2011

Reliance MediaWorks February 2011. Disclaimer.

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Reliance MediaWorks February 2011

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  1. Reliance MediaWorks February 2011

  2. Disclaimer This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Reliance MediaWorks Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment therefore. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company believes to be reasonable in light of its operating experience in recent years. The Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Any opinions expressed in this presentation are subject to change without notice. None of the Company, the placement agents, promoters or any other persons that may participate in the offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith. This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or part, or disclosed by recipients directly or indirectly to any other person. In particular, this presentation is not for publication or distribution or release in the United States, Australia, Canada or Japan or in any other country where such distribution may lead to a breach of any law or regulatory requirement. The information contained herein does not constitute or form part of an offer or solicitation of an offer to purchase or subscribe for securities for sale in the United States, Australia, Canada or Japan or any other jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to or for the benefit of US persons absent registration or an applicable exemption from registration

  3. Reliance ADA Group stepped into the company in FY 2006 • FY 2006 • Operations in Mumbai only • 8 theatres (32 screens) • 14 professionals with > 10 years’ experience Revenues: Rs 1,250 million (USD 26.6 million) • FY 2010 • FY 2006 FY 2010 (60% CAGR over 4 years) • New businesses added, to Yield further results FY 2011 onwards • Market leader in every business • Operations in 118 cities, 5 countries • 156 professionals with > 10 years’ experience • Projects under implementation in 2011: • Studios, TV Post New business areas to incrementally add to revenues in the coming years Revenues: Rs 6,720 million (USD 143 million) 82% from businesses created in last 4 years 56% from businesses in last 2 years

  4. Performance in FY11 • YTD Dec’10 • FY 10 YTD • Studio operational with 70,000 sq ft • BPO operational with 90,000 sq ft Revenues: Rs 7095 million (USD 157 million) Revenue and EBIDTA have increased as compared to last year. With the recent commissioning of the Studios and the BPO facility, we expect film and media services division to be a substantial contributor to our business portfolio

  5. The growth opportunity is very large…. • Films • Net Box Office Collection (“NBOC”) of top 50 films has gone up by 32%, to Rs. 15,050 million (USD 334 Million) in CY 2010 from Rs. 11,440 million (USD 254 million) in CY 2008 • Big Budget films (>500 prints) – 48 in CY 2010 versus 30 in CY 2008 • Average cost of production of big budget films has increased by more than 50% over the last 5 years • Television • Penetration in TV households 60% in FY 2010 versus 50% in FY 2006 • 460 channels in FY 2010 versus 120 channels in FY 2004 • The number of big format shows has increased substantially over the last 5 years

  6. Comprehensive presence across production value chain – Film, TV and Ad Commercials

  7. Film & Media Services (Domestic)

  8. Services Suite Production services Film Post Studios TV Broadcast Film cameras Lights, Grips Set Design & Construction Lab: Mumbai, Chennai, Kolkata Digital Intermediate Promos India VFX Sub-titling Digital Cinema Mastering

  9. 200,000 sq ft state of the art Studio facility being built at Film City Picture: Jan 5, 2011 • Phase I (70,000 sq ft with 3 sound stages) - completed recently • Phase II and III expected to be ready by May and August 2011 Phase I 70,000 sq. ft. – Jan 2011 launch • India's first and only full service Studio Complex designed by LA architects and built to Hollywood standards • Design includes stringent fire protection, detection and fire fighting facilities adhering to LA County Fire Safety Norms • SOPs being developed by LA consultants based on Hollywood Best Practices for studio operations • Experienced expat from LA assisting an Indian team of professionals in implementing SOPs and setting up operations • USPs • Facility for films, TV shows and TV commercials • Largest, fully air-conditioned facility in Mumbai • Built-up area of 2 lakh sq ft over a 7 acre property in Film City • Clear internal height of 58 ft • 8 silent sound stages of different sizes • Studio facility is a natural extension to Production Services portfolio

  10. Film Post • Typical film goes through the film post value chain as – Cans DI VFX Promos Prints (Analogue and Digital) • Incremental services FY 2010 onwards lead to increased wallet share • Focus is to increase share of wallet • New businesses – DI and VFX – leverage existing clients and add significantly to profitability • Cross Selling opportunities tapped * 2010 impacted due to strike

  11. Production Services – Equipment Rental Solutions RMWL is associated with most of the popular reality shows, televised events and films - 33 programmes on general entertainment channels in India, 49 televised events since April 2009. As of December 31, 2010; RMWL rented out film equipment for 83 films.

  12. Film & Media Services (International)

  13. International Business • Distinct business lines • Creative Services – VFX, 2D to 3D conversion, Animation, CGI • Media Services BPO – Restoration, Archival, Migration, Encoding, Transcoding, Compression & Authoring, Standards & Format Conversion • All businesses exhibit strong entry barriers in terms of • Technology • Brand & Credibility • Manpower training • Infrastructure quality • Top Trends in the Industry: Trends Key Drivers • Alternate platforms: TV, Internet and mobile • Demand for high-definition images • 3D • VFX / Animation / CGI • Technology • Skill sets • Front-end/ Development centers • Scale • Digital platform – one world

  14. Presence • We have built global capabilities London New York Los Angeles Tokyo Mumbai Pune Kolkata Chennai Technology Imaging RMW Burbank (Lowry) 3D QC & Operations Centers LA RMW Imaging ops RMW VFX ops London RMW lab ops (i-lab) RMW VFX ops Tokyo Front-end with Imagica Large Delivery Centers Image processing 450 people, fully operational 2D to 3D 450 people fully trained VFX + Animation 300 people, fully operational 1,200 • December 2010 established relationship with Russian World Studios and OGK in Russia

  15. Competitive advantage through proprietary tools • RMW has developed and now owns proprietary imaging tools which facilitate : • Image Processing • Standard Definition to High Definition • 16 mm to High Definition • 3D Alignment • These tools are currently deployed in London, Burbank and Mumbai, and are internationally benchmarked • Leverage the front-end relationship with clients at Burbank : • David Fincher : Zodiac, Benjamin Button, Social Network • Disney : 7-year old relationship, handling Animation Classics such as Fantasia, Alice in Wonderland, Winnie the Pooh trilogy, Cinderella, Jungle Book, Peter Pan, 101 Dalmatians, Sleeping Beauty, Snow White, Pinocchio • James Cameron : Avatar, 4K restoration of Titanic • 4 projects under active discussions (under NDA) November 2010: RMW among 4 companies to receive the Creativity and Innovation Hollywood Post Alliance Award

  16. Exhibition

  17. Population: 1.2 billion • → increasing urbanization • → relatively large youth population • → 43% of population < 25 years of age; 36% between 25-50 years • GDP Growth (Real): ~6.5% • → second highest growing economy • Key driver of growth is to be consumption • Consumption Centres • → spread over 50 cities • GDP Size (PPP adjusted): US$ 3 trillion • → fourth largest economy in the world • Rising Propensity to Spend • → Recreation and education spend doubled from Rs 1,800/- to Rs 4,120/- ; expected to further double to Rs 8,400/- in 4 years India – a consumption driven economy Deep Domestic Demand.. Huge growth potential 17

  18. Growing opportunity for multiplex business • Box-office collection of Rs 68,500 million in CY 2009, growing @ 8% • Growing size of big budget movies, a key revenue driver for multiplexes • Print size of big budget movies has grown significantly • Multiplex contribution has gone up from 10% in CY 2006 to around 25 percent of the total domestic theatrical revenues for the overall Indian film industry and as much as 60% for Hindi films • Hollywood : a new source of revenue stream, has grown to 5.5% of Indian box-office from 2% in 2006 • Low screen density in top cities (screens per million population) Mumbai: 23 Delhi: 13 Thane: 14 Kolkata: 8 Chennai: 5 Bangalore: 21 Ahmedabad: 19 Hyderabad: 6 Surat: 12 Kanpur: 15 Pune: 16 Jaipur: 8 Lucknow: 17 Nagpur: 18 Indore: 13 Ludhiana: 11 • International benchmarks (screens per million population) US: 117 France: 77 Denmark: 61 Italy: 52 Spain: 46 Germany: 45 Belgium: 43 UK: 30

  19. Multiplex business : benchmarked globally Multiplex penetration (admits as a % of population) and spend per head expected to grow : in sync with international benchmarks – as propensity to spend increases in these cities

  20. BIG Cinemas’ network in India

  21. Schematic representation • 268 screens • 81 cities * - Additionally serves the Telugu market ** - Additionally serves the Tamil market

  22. Operating performance

  23. Growth in key parameters over last 2 years - India • Apart from current growth, Tier 2/3 cities represent significant opportunity for growth in the next 3-4 years 23

  24. Growth in key parameters over last 2 years - India (cont.) We have registered significant growth – in ticket prices and spend on F&B * Same Store refers to cinema theatres which have been operational for entire 9 months in the period mentioned 24

  25. Content flow and programming • Big releases • 5 big banners in Hindi (Yashraj, BIG, Dharma, UTV, Eros) slated to release 20 films in next 18 months • Around 13 high-value Hollywood / 3D movies expected in next 12-15 months • A-list stars have 14 films on floor • Neighborhood centric content selection, mapping and scheduling • Regional language films (Gujarati, Marathi, Bhojpuri etc.) • Introduced ‘uninterrupted’ English film shows ; subtitled English films

  26. Customer experience : mapping key touch points screens F&B box office • 5 key • touch points online feedback • 2 exit foyer concession washrooms screen entrance • 1 • 3 seating lounge welcome foyer security frisking baggage drop- off box office typical customer walk-through

  27. Customer experience : innovative formats

  28. Awards won over the years • Cine Diner won the award for Most Admired Innovative Concept of the Year at India Retail Forum 2010 • Cine Diner also won 2nd place at the IAD – Interior & Architecture Awards 2009 in the Best Interior Design - Hospitality category • ‘Most Admired Retailer in Entertainment’ at the India Retail Awards 2009 • ‘International Exhibitor of the Year’ at the prestigious ‘CineAsia 2008’ at Macau in December 2008 • ‘Retailer of the Year’ in Entertainment for the second consecutive year at the India Retail Summit in 2007 • ‘Most Admired Retailer in Entertainment’ at the India Retail Awards 2007

  29. Mystery audits • Key audit impact areas: Exterior, Box Office, Lobby, Auditoriums, Concession and Restrooms • Carried out by external agencies ( which specialize in hospitality industry ) • Audit score mapped against other cinema chains • Periodicity – once in 2 months • Action taken – theatre managers to provide action taken report (ATR) to COOs

  30. Brand Connect WOMEN’S DAY (8th March’10 ) MOTHER’S DAY (9th May’10 ) INDIAN INDEPENDENCE DAY ( 7-15th Aug’10 ) – global initiative WORLD ENVIRONMENT DAY (5th June’10 ) – global initiative

  31. Marketing : Grassroots , promotions, contests… • 3 + 1 Ticket combo offer (Oct 10 to Mar 11) • Customer Loyalty program • (launch Dec’10) • Launched across 30 cinemas • Hot Ticket festival offer (May’10) • 75,000 Unique registrations • Sponsored 1st prizes – i10 car • Prepaid movie ticket vouchers • (Dec’10) • SURE SHOT Winner (Launch Sept’10) • Guaranteed prize won for every transaction at BIG Cinemas • Prizes are coupons/vouchers from local retailers (neighborhood centric)

  32. Retail micro-orientation Daily sales plan Customer-oriented pricing Cost efficiency • Cinema-wise weekly admits plotted from release schedule: • Categorization of movies • Historical performance of category • Translated to daily target footfalls • Modified every week for next fortnight, based on: • Actual release schedule • Verdict of film • Movie specific pricing • Eg, Tees Maar Khan, Gol3 Idiots, Kites, etc • Day-part pricing • E.g. R-Mulund: • Morning: Rs 70/- • 1:00 p.m.: Rs 110-130/- • Evening: Rs 175-200/- • Special pricing of Rs 50/- and Rs 150/- • Food price increase by Rs 10-15/- on big week-ends • Electricity management (lights, A/C) • Seasonal staffing (130 increased from Diwali to New Year) • Micro-monitoring of yield efficiency (Popcorn, Pepsi) – to reduce spoilage and wastage

  33. Path to revenue growth and profitability drivers : F&B F & B Increasing SPH - Pepsi deal - Movie Munchies product mix : kathi rolls / salads/ fresh sandwiches / candy floss , etc - Combo deals : Value meals / 3 product combos, etc - Seat serve: Mobile Vendors - Kids special Combos / merchandise

  34. Off Screen Advertising Auditorium doors Lobby Lounge Washrooms Signage Exit Passage Stair Case

  35. Exhibition overseas International Collections for Indian films Exhibition – overseas 205 screens in US 72 screens in Malaysia Europe • Programming model with Pathe in Netherlands since June ‘09 • Screen branding • 40% increase in footfalls • Now expanding to France (Paris and Lyon) with Pathe and Belgium (Brussels and Antwerp) with Kinepolis BIG chain: • 35% of Hindi • 70% of Tamil / Telugu • Play mix of content • Opened market beyond KL • SPH highest among chains • Account for 30-33% of Tamil GBOC

  36. Need for theatrical presence in US • Total 200 screens: 55 India focused screens, balanced with 145 Hollywood screens (managed locations) • Strong Indian community – 2.6 million population + H1, L1, students • Including other Asians (Pakistani, Bangladeshi) aggregates approximately 3.6 million • US accounts for 30 to 33 % of overseas theatrical revenue for Hindi movies (Rs 2,000 million) • US cinema chains reluctant to carry Indian content : • Hollywood movies are first priority • Cultural mismatch – unable to handle Indian crowds • Indian movies get second-rung theatres : • Poor customer experience • Deals with distributors on MG basis – substantial under-reporting • Highly unorganized distribution pattern for Tamil and Telugu movies 36

  37. Canonsburg Madisonville • BIG Cinemas in US New York Pigeon Forge Greenville New Jersey Laughlin Chicago Freemont Cleveland San Jose Herndon Norfolk Falls Church Decatur Los Angeles Kansas Palm Bay Norcross Greenacres Corona Cherokee

  38. BIG Cinemas in US • Growth in Box Office YTD Dec’10 : 10% increase since last year • BO contribution • Promotions : Movie specific (star premiers, sweepstakes, social media) and Brand specific (Everyone is a Winner !) • Events and Festivals : Green your lifestyle, Independence Day, Diwali Talent Hunt • Innovative marketing tools : Print@home, Online Polls, Tag it ! • Unlocking the advertisement potential • Indian Diaspora median income higher than average American or any other ethnic community • Focused access, understanding and reach to community provides greater value to advertisers • Example Spanish, African-American etc. which are now mainstream focus • Our focused consumer targeting from this year has begun yielding revenues 38

  39. Exhibition – Malaysia 72 screens in Malaysia • Play mix of content • Opened market beyond KL • Account for significant % of Tamil GBOC

  40. BIG Synergy

  41. Snapshot of shows • Leader in original format, studio based, interactive shows • Cutting edge shows : Kaun Banega Crorepati, Dus Ka Dum, Jhalak Dikhhla Jaa – Dancing with the Stars, Kya Aap Paanchi Paas Se Tez Hain, Aap Ki Kacheri and India’s Got Talent • Winner of 2009 Indian Telly Awards for “Best Production house of the year “

  42. Exhibition overseas International Collections for Indian films Thank you 205 screens in US 72 screens in Malaysia Europe • Programming model with Pathe in Netherlands since June ‘09 • Screen branding • 40% increase in footfalls • Now expanding to France (Paris and Lyon) with Pathe and Belgium (Brussels and Antwerp) with Kinepolis BIG chain: • 35% of Hindi • 70% of Tamil / Telugu • Play mix of content • Opened market beyond KL • SPH highest among chains • Account for 30-33% of Tamil GBOC

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